A recent audit from the Department of Health and Human Services Office of Inspector General (OIG) has revealed a significant issue with Medicare payments for unused organs. The audit found that between $380 million and $400 million was paid over six years for organs that were not used in Medicare-covered transplants.

Discrepancy Between Law and Guidance

The audit highlights a discrepancy between federal statutory requirements and Centers for Medicare & Medicaid Services (CMS) guidance. Medicare reimbursed transplant centers even when organs were transplanted into non-Medicare patients or not used at all.

“Medicare was paying acquisition costs under guidance that effectively assumed an organ transferred through the transplant system would ultimately be used for a Medicare patient. Sometimes it wasn’t,” Michael Ryan, a finance expert, told Newsweek.

This reveals a failure in rules and oversight, resulting in taxpayers bearing the cost difference.

Financial Impact

The findings are crucial as lawmakers examine federal health-care spending and Medicare’s finances. Organ transplantation is a costly service covered by Medicare. The program reimbursed certified transplant centers over $3 billion for organ acquisition costs involving approximately 39,000 organs in 2023 alone.

The audit implies current reimbursement practices might not fully align with federal law, potentially costing taxpayers significant amounts.

Understanding the Law

Medicare can reimburse transplant centers only for organs used in Medicare-covered transplants per federal law. However, CMS guidance suggests treating transferred organs as “Medicare usable” based on the assumption they will be used in such procedures. In practice, some organs go to non-Medicare patients, while others remain unused.

The reviewed period was 2017 to 2022, with the audit pointing out the conflict between CMS guidance and statutory requirements.

“Every unnecessary dollar coming out of Medicare is money that isn’t available for actual patient care, especially in a program already under enormous financial pressure,” Ryan said.

Audit Insights

OIG examined a sample of 180 organs reported as Medicare-usable from 12 transplant centers. Medicare paid around $2.8 million for 55 organs that should not have been reimbursed under federal requirements.

• 43 organs were transplanted into non-Medicare-covered patients.
• 12 organs were never transplanted.

Based on these findings, the watchdog estimated Medicare paid transplant centers approximately $380 million for organs not used in Medicare-covered transplants during the audit period.

Challenges of Organ Waste

Drew Powers from Powers Financial Group argues the waste level isn’t excessively significant. He suggests that over six years, only 2 percent waste occurred.

“If we spread that $380 million evenly over six years, it is only 2 percent waste. For something as precarious as organ transplant, 2 percent waste does not seem like an outlandish figure,” Powers told Newsweek.

Recommendations for Improvement

OIG recommends that CMS recover $154,210 in payments from two transplant centers lacking sufficient documentation to support claims. Furthermore, CMS should revise guidance so only organs transplanted into Medicare enrollees are accounted as Medicare-usable organs.